Multistate Settlement Against Deceptive Cancer Charities

AUSTIN, May 20, 2015 - Texas Attorney General Ken Paxton, as part of a coalition with 49 other states, the District of Columbia and the Federal Trade Commission (FTC), today announced settlements with deceptive cancer charities and their operators, who scammed more than $187 million from consumers throughout the country. The settlements with two organizations and three individuals net judgments of nearly $137 million, while litigation continues against those who have not yet settled.

“These are particularly heinous acts, as they takes advantage of people’s best intentions to support our ongoing war against the dreaded disease of cancer,” said Texas Attorney General Ken Paxton. “With the help of real charities and donors, cancer researchers in Texas and across the country are working to make cancer a disease of the past. Their jobs, unfortunately, are made harder every time someone deceptively uses the fight against cancer as a front to enrich themselves and their friends.”

The deceptive charities involved include the Cancer Fund of America, Children’s Cancer Fund of America, Cancer Support Services and The Breast Cancer Society. The organizations portrayed themselves to donors as legitimate charities with substantial nationwide programs whose primary purposes were to provide direct support to cancer patients, including children with cancer and breast cancer patients. While they raised more than $187 million from donors nationwide from 2008-12, only 5 percent of those funds was actually used to assist cancer patients. Instead, the individuals enriched themselves, a small group of related individuals and their for-profit fundraisers.

To hide their high administrative and fundraising costs from donors and regulators, the groups used accounting schemes to create the illusion that they were much larger and much more efficient with donors’ dollars than they actually were.

Texas Connection
The Cancer Fund entities used false, misleading and deceptive representations in their solicitations to Texans through telephone calls and direct mail, raising millions in cash donations from generous Texans, violating the Texas Deceptive Trade Practices – Consumer Protection Act.

Prior to the proposed settlement, The Breast Cancer Society raised $45,000 to open a new Hope Supply Warehouse in Houston as a storage facility for donations. The facility never opened, and under the proposed settlement the funds will be transferred to a qualified Texas charity that provides direct assistance to breast cancer patients.

Settlement Agreement
The proposed settlements require that Children’s Cancer Fund and The Breast Cancer Society be dissolved, and the five defendants be banned from fundraising, operating a charity and overseeing charitable assets.

Defendants named in federal court complaint are:

The Breast Cancer Society, Inc.
Cancer Fund of America, Inc.
Cancer Support Services, Inc.
Children’s Cancer Fund of America, Inc.
James Reynolds, Sr.
James Reynolds, II
Kyle Effler
Rose Perkins

The federal and state plaintiffs today also filed proposed stipulated judgments with five of these defendants: Children’s Cancer Fund and Rose Perkins; The Breast Cancer Society and James Reynolds, II; and Kyle Effler. Litigation will proceed against Cancer Fund of America, Cancer Support Services (which the complaint alleges operates as a common enterprise with Cancer Fund of America), and James Reynolds, Sr.

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